ACC – Perfectionist Construction Company

$15.00

Description

Perfectionist Construction Company was the low bidder on an office building construction contract. The contract bid was $9 million, with an estimated cost to complete the project of $7 million. The contract period was 3 months starting May 1, 2014. The company uses the cost-to-cost method of estimating earnings. Because of changes requested by the customer, the contract price was adjusted downward to $8.6 million on May 1, 2015.

A record of construction activities for the years 2014–2017 is as follows:

Year Actual Cost-Current Year Progress Billing Cash Receipts
2012 $1,900,000 $2,500,000 $1,900,000
2013 $3,600,000 $3,400,000 $3,100,000
2014 $1,670,000 $2,700,000 $2,500,000

The estimated cost to complete the contract as of the end of each accounting period is:
2012 $5,150,000
2013 $1,600,000
2014 $ 0

Calculate the gross profit for the years 2014–2016 under the percentage-of-completion method of revenue recognition. (Note: Round percentage to two decimal places for percentage completed.)

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